New Delhi, India, December 03, 2018 — Cities in South Asia have the potential to attract more than $2.5 trillion in climate-related investments in six key sector by 2030, according to a new report by IFC, a member of the World Bank Group. Most of climate-smart opportunity – $1.8 trillion – is in green buildings.
The report takes a deep dive to estimate the climate investment potential of Rajkot city in Gujarat, the 22nd fastest growing city in the world, and pegs it at $4 billion. Half of this opportunity is in green buildings, followed by public transport and electric vehicles ($1.2 billion). Urban water ($220 million), renewable energy ($130 million), and waste ($50 million) remain essential components of sustainable urban development.
Globally, cities consume over two-thirds of the world’s energy and account for more than 70 percent of global carbon dioxide emissions. As the population of Rajkot continues to grow, and the city moves to become a smart city, it will continue to see a significant growth in construction. Residential buildings sector accounts for a third of Rajkot’s emissions and the transport sector accounts for 27 percent. Rajkot has committed to reduce its emissions by 25 percent from 2012/13 levels by 2020.
“There’s a great urgency to address climate change – we must take meaningful action now,” said IFC CEO Philippe Le Houérou. “Cities are the next frontier for climate investments, with trillions of dollars in untapped opportunities. To deliver on the promise of climate-smart cities, the public sector needs to enact reforms that are aimed at attracting more private sector financing.”
The report highlights innovative approaches that cities are already using—such as green bonds and public-private partnerships—to attract private capital and build urban resilience. With the private sector, Rajkot has seen several successful PPPs including for solar rooftops on buildings, street lighting, high-purity sewage treatment plant, water and wastewater management, and development of green spaces and sustainable transport infrastructure.
“In addition to public funding from the state and central governments, cities are leveraging private sector funds through PPPs. Private sector can play an important role in supporting cities through a combination of innovation, know-how, financing, service delivery models, said Jun Zhang, IFC Country Head for India. “Ensuring that the expected growth in cities is planned in a sustainable manner will be key to India’s urban development and its ability to mitigate emissions and adapt to climate impacts.”
IFC’s PPP advisory engagements across cities in India and has helped attract private sector financing and helped cities design innovative, first-of-its kind PPP projects in sectors such as renewable energy, hospitals, diagnostic centers, inland waterways, sewage treatment plants for clean Ganga initiative, and more. These have been replicated on a much larger scale in India and several models are being studied by local and national governments in other countries.
Addressing climate change is a strategic priority for IFC. Since 2005, IFC has invested $22.2 billion in long-term financing from its own account and mobilized another $15.7 billion through partnerships with investors for climate-related projects. The latest report is part of the Climate Investment Opportunities report series initiated by IFC in 2016.
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org